Payment
History
What
is your track record?
APPROXIMATELY 35% OF YOUR SCORE IS BASED ON THIS
CATEGORY.
The
first thing any lender would want to know is
whether you have paid past credit accounts on
time. This is also one of the most important
factors in a credit score.
However,
late payments are not an automatic
"score-killer." An overall good credit
picture can outweigh one or two instances of, say,
late credit card payments. By the same token,
having no late payments in your credit report
doesn't mean you will get a "perfect
score." Some 60%-65% of credit reports show
no late payments at all — your payment history
is just one piece of information used in
calculating your score.
Your
score takes into account:
- Payment
information on many types of accounts.
These will include credit cards (such as Visa,
MasterCard, American Express and Discover),
retail accounts (credit from stores where you
do business, such as department store credit
cards), installment loans (loans where you
make regular payments, such as car loans),
finance company accounts and mortgage loans.
- Public
record and collection items — reports of
events such as bankruptcies, foreclosures,
suits, wage attachments, liens and judgments.
These are considered quite serious, although
older items and items with small amounts will
count less than more recent items or those
with larger amounts.
- Details
on late or missed payments
("delinquencies") and public record
and collection items — specifically, how
late they were, how much was owed, how
recently they occurred and how many there are.
A 60-day late payment is not as risky as a
90-day late payment, in and of itself. But
recency and frequency count too. A 60-day late
payment made just a month ago will count more
than a 90-day late payment from five years
ago. Note that closing an account on which you
had previously missed a payment or satisfying
a judgment or collection item does not make
the late payment or item disappear from your
credit report.
- How
many accounts show no late payments. A
good track record on most of your credit
accounts will increase your credit score.
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